EXHIBIT 10.83


 


	
  NewCorp Resources
  Electric Cooperative, Inc.

  	
   

  	
  Substitute Sheet
  No. 1

  
	
  Service Agreement No. 2

  	
   

  	
   

  



 


MASTER OPERATION, MAINTENANCE AND

ADMINISTRATIVE SERVICES AGREEMENT


 


This MASTER OPERATION,
MAINTENANCE AND ADMINISTRATIVE SERVICES AGREEMENT (this “Agreement”) is
entered into as of September 29, 2003, by and between CAP ROCK ENERGY
CORPORATION, a Texas corporation (the “Services Provider”), and
NEWCORP RESOURCES ELECTRIC COOPERATIVE, INC., an electric cooperative
corporation (the “Owner”).  The
Services Provider and the Owner are each referred to herein individually as a “Party”
and, collectively, as the “Parties”.


 


RECITALS


 


WHEREAS, the Owner owns a
305.9 mile electric transmission system and related assets located in the West
Texas area and within the Southwest Power Pool service territory (the “System”);
and


 


WHEREAS, the Owner
desires to engage the Services Provider to perform and provide, and the
Services Provider has the capacity to perform and provide for the benefit of
the Owner, certain administrative, engineering, construction, facility studies,
facility upgrade and replacement services, planning, operation, maintenance,
insurance and other support services required in connection with the System;


 


NOW, THEREFORE, in
consideration of the foregoing premises and the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:


 


1.                                     Definitions.  Capitalized terms used in this Agreement
without other definition shall have the meanings specified in this Section 1,
unless expressly stated otherwise.  The
singular shall include the plural and the masculine shall include the feminine
and neuter, and vice versa.  The terms
“include”, “includes” and “including” shall mean “including, but not limited
to”, unless stated otherwise.


 


“Administrative
Fee” has the meaning set forth in Section 5(a)(iii).


 


“Administrative
Services” has the meaning set forth in Section 2.


 


“Annual
Budget” has the meaning set forth in Section 6(a).


 


“Applicable
Law” means any applicable laws,
ordinances, rules, codes, regulations, permits, licenses and legal requirements
of any kind issued by Governmental Authorities to the extent they apply to the
System or the Services.


 


 


	
  Issued by:

  	
  Lee D. Atkins

  	
  ,

  	
  Secretary / Treasurer

  	
  Effective on:  October 1, 2003

  
	
   

  	
  Name

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
  Issued on: 
  September 29, 2003

  



 

















 


“Claims” means any
and all losses, claims, causes of action, damages, and liabilities of any kind
or nature whatsoever, including but not limited to, shortages, obligations,
liabilities (joint or several), payments, judgments, suits, litigation,
proceedings, equitable relief granted, consents, agreed orders, settlements,
awards, demands, offsets, defenses, counterclaims, actions or proceedings,
assessments, deficiencies, taxes, fines, penalties, assessments, costs, fees,
disbursements, including without limitation, fees, disbursements and reasonable
expenses of attorneys (including fees, disbursements and reasonable expenses of
attorneys incurred in connection with the cost of defense of any claims or
causes of action but, in the case of claims between the Parties, only to the
extent incurred in connection with litigation or arbitration), accountants and
other professional advisors and of expert witnesses and costs of investigation
and preparation and costs of court of any kind or nature whatsoever, interest
and penalties.  “Claims” shall
not include diminution in value, indirect, consequential, special or punitive
damages, loss of profits or loss of reputational goodwill.


 


“Deferred
Reimbursable Costs” has the meaning set forth in Section 7.


 


“Emergency
Situation” means any event or circumstance that requires the taking of
immediate measures to prevent or mitigate a situation endangering life or
property.


 


“Facility Agreements” means, collectively, the OATT,
the NITSA, and the NOA.


 


“FERC”
means the Federal Energy Regulatory Commission or any successor thereto.


 


“Governmental Authority” means any federal, state
or local governmental department, authority, agency, political subdivision,
court or other body, office or public entity, including any zoning authority,
building inspector, or health, environmental, or safety inspector having
jurisdiction over the Owner, the Services Provider or the System.


 


“Invoice”
has the meaning set forth in Section 5(c).


 


“Lender”
means any entity or entities providing construction or permanent debt financing
for the System, including any assignee or successor thereto.


 


“NITSA”
means the Network Integration Transmission Service Agreement entered into
between the Services Provider and the Owner consistent with the terms of the
OATT Tariff.


 


“NOA”
means the Network Operating Agreement entered into between the Services
Provider and the Owner consistent with the terms of the OATT Tariff.


 


“OATT”
means the Owner’s Open Access Transmission Tariff accepted for filing by FERC
in Docket No. OA97-14-001 on February 24, 1999 (FERC Electric Tariff, First
Revised Volume No. 2).


 


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“Prudent
Utility Practice” means any of the practices, methods or acts engaged in or
approved by a significant portion of the national electric utility industry
that at a particular time, in the exercise of reasonable judgment in light of
the facts known at the time a decision was made, would have been expected to
accomplish the desired result, (i) in a manner consistent (to the extent
practicable) with applicable laws, reliability, safety, environmental protection,
economy and expedition and commercial considerations and (ii) with due regard
being had to the relevant equipment manufacturer’s recommended standards,
practices and procedures (as may be modified from time to time), where this
definition applies to the Owner, by the Owner and where this definition applies
to the Services Provider, by the Services Provider, in each case in the light
of operating and maintenance experience or the other provisions of this
definition.  By way of clarification,
Prudent Utility Practices are not intended to be limited to the optimum
practice, method or act to the exclusion of all others, but rather to be a
range of possible practices, methods or acts engaged in or approved by a
significant portion of such electric utility industry.


 


“Reimbursable
Costs” has the meaning set forth in Section 5(a)(ii).


 


“Services”
has the meaning set forth in Section 2.


 


“Services
Fees” has the meaning set forth in Section 5(a).


 


“Subordinated
Loans” has the meaning set forth in Section 7.


 


“Variable
Services” has the meaning set forth in Section 2.


 


2.                                     Provision
of Services.  The Owner hereby
engages the Services Provider to provide certain corporate administrative,
insurance, tax, accounting, information technology, legal, management and
consulting services (collective, the “Administrative Services”) and
certain engineering, construction, facility studies, facility upgrade and
replacement services, planning, operation, and maintenance, and other support
services (collective, the “Variable Services”), in case more
specifically set forth and described in Exhibit A hereto (collectively,
the “Services”) and the Services Provider hereby accepts such engagement
and agrees to render such Services, in each case, effective as of the date of
this Agreement.  The Parties agree that Exhibit A
(which shall be incorporated by reference into this Agreement) may be amended
from time to time by the mutual agreement of the Parties.  In addition, as and when requested by the
Owner, the Services Provider shall use commercially reasonable efforts to
provide any other services requested by the Owner in connection with the
ownership, operation and/or maintenance of the System.


 


3.                                     Manner
of Performance.


 


(a)                                  The
Services Provider shall perform, or cause to be performed, the Services in
accordance with (i) Prudent Utility Practices, (ii) the applicable provisions
of all Facility Agreements as they apply to the Services, (iii) all Applicable
Laws, (iv) applicable terms of applicable insurance policies, and so as
not to void any


 


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manufacturer’s or
subcontractor’s warranties, and (v) any other provision of this Agreement.


 


(b)                                 The
Services Provider may subcontract some or all of the Services.  For purposes of this Agreement, no
contractual relationship will exist between the Owner and any such
subcontractor or any affiliate of the Services Provider.  In all cases under this subsection (b), the
Services Provider will remain responsible for the performance of its
obligations under this Agreement.  The
Services Provider represents and warrants to the Owner that the Services
Provider shall employ only experienced services personnel and/or qualified
subcontractors, that have the skill and capacity necessary to perform the
Services.


 


(c)                                  The
Services Provider will require all persons performing the Services to comply
with all generally applicable policies, procedures and directives of the
Services Provider, including security, environmental protection, employee
health and safety, sexual harassment, access, use of alcohol and controlled
substances, and similar activities.


 


4.                                     Owner
Responsibilities.


 


(a)                                  The
Owner agrees to cooperate with, and to assist and support, the Services
Provider in connection with the performance of the Services.


 


(b)                                 To
the extent that access to the System or other property or facilities of the
Owner is at any time reasonably necessary or appropriate in connection with the
performance of the Services, the Owner agrees to grant such access to the
Services Provider and its subcontractors and representatives.  The Services Provider shall not be
responsible for any loss, damage, fine, penalty, cost, expense, delay,
interruption, breach, non-performance or other failure of any of the Services
to the extent resulting from or arising out of or in connection with any
failure by the Owner to provide access to its property, facilities or personnel
in connection with the performance of the Services.


 


5.                                     Compensation.


 


(a)                                  In
consideration for the Services to be provided by the Services Provider pursuant
to this Agreement, subject to the limitations set forth in this Section 5 and
Sections 6 and 7 below, the Owner agrees to pay the Services Provider the
following amounts (collectively, the “Services Fees”):


 


(i)                                     all
verifiable direct and indirect reasonable costs by personnel of the Services
Provider (including, but not limited to costs of labor, benefits, materials,
storage and transportation plus a verifiable allocation of overhead costs
calculated under the same methodology as is employed by the Services Provider
from time to time in connection with the provision of services for affiliated
entities and business units) in connection with the performance of the Variable
Services;


 


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(ii)                                  reimbursement
for all Variable Services performed by subcontractors based on the reasonable
costs invoiced by such subcontractors (without any mark-up or adder) other than
subcontracts which the Owner elects to pay directly (collectively, the amounts
in clause (i) and (ii) are referred to as the “Reimbursable Costs”); and


 


(iii)                               an
administration fee equal to equal to the amount agreed to in the Annual Budget
for payment of all Administrative Services (the “Administrative Fee”).


 


 


(b)                                 The
Services Provider agrees that the Owner shall have the right to pay the Service
Provider’s subcontractors directly for the costs incurred under any subcontract
entered into for the provision of Services and any amounts paid by the Owner
directly to a subcontractor of the Services Provider shall be excluded from the
Services Fees.


 


(c)                                  On
a monthly basis, the Services Provider shall submit to the Owner a detailed,
itemized invoice (an “Invoice”) setting forth the Variable Services
provided to the Owner during the previous month, the applicable monthly portion
of the Administrative Fee, and any outstanding reimbursable expenses or charges
incurred by the Services Provider under this Agreement and the amount payable
by the Owner for such Services and expenses or charges pursuant to this
Agreement.  The Owner shall pay all
undisputed amounts owing in respect of each Invoice within ten (10) days of
receipt thereof.


 


(d)                                 Any
amount not paid by the Owner when due under this Agreement (except as
contemplated in clause (e) and Section 7 below) shall bear interest at a rate
equal to the prime rate, as reported in the Wall Street Journal on the last
business day of the month in which the applicable Invoice was received, plus
two (2) percent per annum (or, if lower, the highest rate permitted by
applicable law) accrued from the due date of such payment until such payment is
actually received by the Services Provider.


 


(e)                                  Notwithstanding
anything to the contrary in this Agreement, the Services Provider hereby waives
the right to receive payment for or reimbursement by the Owner and agrees that
it shall not be entitled to collect from the Owner any Services Fees for
charges associated with any of the Services, or portions thereof, that the FERC
determines not to be allocable by the Owner to its transmission customers.


 


6.                                     Budgeting
Process.


 


(a)                                  The
Parties agree that the Reimbursable Costs shall be paid to the Services
Provider only to the extent that such Reimbursable Costs are contemplated in a
budget that has been approved in advance by the Owner pursuant to the
procedures set forth below (each such approved budget, an “Annual Budget”);
provided, that in the case of Emergency Situations, the Services
Provider shall have the right to expend up to an amount not to exceed $250,000
without first obtaining the Owner’s approval. 
The initial Annual Budget for calendar year 2003 is attached hereto as Exhibit
B.


 


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(b)                                 At
least sixty (60) days prior to the end of each calendar year, the Services
Provider shall prepare and submit to the Owner for approval a proposed annual
operating plan for the following calendar year in substantially the form of Exhibit
B.


 


(c)                                  Owner
shall review the Services Provider’s proposed Annual Budget and shall provide
comments within thirty (30) days after receipt of such proposed Annual
Budget.  The Owner and the Services
Provider shall then use their best efforts to agree upon a final Annual Budget
before the end of the calendar year. 
The Parties acknowledge that such agreed upon Annual Budget must be
submitted to the Owner’s Lender for review and adoption in accordance with the
Owner’s applicable financing documents. 
The final Annual Budget as approved by the Parties and the Owner’s
Lender shall remain in effect throughout the applicable calendar year, subject
to such necessary updating, revisions or amendments as may be proposed by
either Party and consented to in writing by the other Party.  The Services Provider shall notify the Owner
as soon as reasonably possible of any material deviations or discrepancies from
the obligations contained in the Annual Budget.


 


(d)                                 If,
by the first day of any calendar year, the Parties have not been able to reach
an agreement with respect to any portion of the Annual Budget for such calendar
year, then:


 


(i)                                     any
agreed portions of the Annual Budget shall be adopted and implemented for the
applicable Operating Year in accordance with Section 6(c), and


 


(ii)                                  the
disagreement in respect of the unresolved portions of the Annual Budget shall
be resolved in accordance with the provisions of Section 15 and, pending the
resolutions of such dispute, the applicable portions of the Annual Budget for
the prior calendar year with respect to such unresolved portions shall remain
effective.


 


7.                                       Deferral
of Payment; Subordinated Loans.  The
Services Provider hereby agrees to: 
(a) defer receipt of payment for any Reimbursable Costs for
Services performed in connection with (i) the repair or replacement of
wires, poles, and related System assets which exceed the amounts budgeted
therefor in the Annual Budget and (ii) Emergency Situations, in each case
to the extent such Reimbursable Costs exceed the amounts made available to the
Owner under its applicable financing documents after taking into account any
applicable working capital funds, maintenance reserves and insurance proceeds
(collectively, the “Deferred Reimbursable Costs”) and (b) pay any
subcontractor or third party owed any such Deferred Reimbursable Costs.  The Services Provider and Owner hereby agree
that the Owner’s failure to pay for the Deferred Reimbursable Costs, except as
set forth in the immediately succeeding sentence, shall not constitute a
material breach of this Agreement.  All
Deferred Reimbursable Costs shall be treated as unsecured loans made by the
Services Provider to the Owner which shall bear interest at a rate of 12% per
annum from the date of the applicable Invoice until paid in full (such loans,
the “Subordinated Loans”).  The
unsecured loans made by the Services Provider in respect of Deferred
Reimbursable Costs shall be fully subordinated in right of payment to any loans
made by the Owner’s Lender and shall have a maturity date of September 30,
2018;


 


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provided, however, that the
Owner agrees to make principal and interest payments with respect to such
Subordinated Loans from time to time from any funds available to the Owner
after the payment of all other operation and maintenance costs incurred by the
Owner (including under this Agreement), debt service obligations to the Owner’s
Lender and the funding or replenishment of any working capital or maintenance
reserves under the Owner’s applicable financing documents.


 


8.                                     Term.


 


(a)                                  The
term of this Agreement shall commence as of the date hereof and shall continue
for a period of twenty (20) years, unless earlier terminated pursuant to the
terms of this Agreement.


 


(b)                                 This
Agreement, or the provision of any portion of the Services by the Services
Provider hereunder, may be terminated at any time upon the mutual written
consent of the Services Provider and the Owner (with the concurrence of the
Owner’s Lender if applicable).


 


(c)                                  Either
Party may, by written notice to the other, terminate this Agreement or suspend
its further performance without terminating this Agreement if the other Party
materially breaches any of its material obligations under this Agreement and
fails to cure such breach within thirty (30) days following a final and binding
determination, by mutual agreement (with the concurrence of the Owner’s
Lender), arbitration or final, non-appealable judgment of a court of competent
jurisdiction, that such breach has occurred (or, if the breach is such that its
cure is possible but will take longer than thirty (30) days, fails to commence
to cure such breach within such thirty (30) day period and proceed diligently
therewith until cured), and (ii) the Services Provider may terminate this
Agreement or suspend its further performance without terminating this Agreement
if the Owner (subject to the limitations in Section (7)) fails to pay any
amount due and owing to the Services Provider hereunder within thirty (30) days
following receipt of written notice of non-payment from the Services Provider.


 


(d)                                 Upon
expiration or termination of this Agreement for any reason, the Owner shall
promptly pay to the Services Provider all amounts owing to the Services
Provider for the Services performed or reimbursable expenses incurred as
provided herein prior to such expiration or termination or, if terminated by
the Owner.


 


(e)                                  Upon
expiration or termination of this Agreement, the Services shall terminate and
no Party shall have any further duty or obligation hereunder; provided,
however, that the confidentiality and indemnity provisions set forth as
Section 11 and Section 12 of this Agreement shall survive the termination or
expiration of this Agreement.


 


9.                                     Books
and Records.  The Services Provider
shall keep records and books of account showing all charges, disbursements or
expenses made or incurred by it in performing the Services and shall preserve
such records and books of account for a period of three (3) years following
incurrence of such expenses, or longer if required by Applicable Law.


 


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10.                               Access
to Records.  The Owner, directly or
through authorized representatives, shall at all times during reasonable
business hours have access to and the right to audit, inspect and make copies
of any and all books, records and accounts, invoices, contracts, canceled
checks, payrolls and other documents and papers of every kind held by the
Services Provider pertaining to the performance of the Services and all
charges, disbursements and expenses made or incurred by the Services Provider
in performing the Services and all information related to the calculation of
overhead costs by the Services Provider.


 


11.                               Indemnification.  Except as set forth below, the Services
Provider agrees to indemnify, defend and hold harmless the Owner and its
officers, directors, representatives, agents, shareholders and employees from
and against and in respect of any and all Claims incurred or suffered by the
Owner in connection with, arising out of, or relating to, directly or
indirectly, the Services.  The Services
Provider shall not indemnify, defend or hold harmless the Owner from and
against Claims incurred or suffered by the Owner as a result of any negligence,
gross negligence, reckless or willful breach or misconduct by the Owner in
connection with, arising out of or relating to, directly or indirectly, the
Services.


 


12.                               Confidentiality.  Each Party acknowledges that its performance
under this Agreement will necessarily involve access by the other Party to
certain information regarding the organization, personnel, business activities,
policies, finances, marketing plans, projected revenues, rights, obligations,
liabilities and strategies of the other Party. 
Each Party acknowledges that all such information is confidential and/or
proprietary to the other Party and agrees that, during the term of this
Agreement and all times thereafter, it will not disclose to any unauthorized
party any such information.  The
restrictions of this Agreement shall not be applicable to any information
which: (i) is or becomes known to the public other than as a result of a breach
of this provision or (ii) is disclosed pursuant to the requirements of
Applicable Law.


 


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13.                               Limitation
of Liability. THE SERVICES PROVIDER SHALL NOT BE LIABLE HEREUNDER FOR ANY CONSEQUENTIAL DAMAGES,
INCLUDING LOSS OF BUSINESS OR PROFITS, AND WHETHER OR NOT THE SERVICES PROVIDER
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTHING IN THIS AGREEMENT
SHALL BE CONSTRUED OR INTERPRETED TO TREAT THE SERVICES PROVIDER AS THE
GUARANTOR OF OWNER’S OBLIGATIONS TO ANY LENDER UNDER ANY CREDIT AGREEMENT OR
FINANCING ARRANGEMENTS INVOLVING THE SYSTEM.


 


14.                               Limited
Warranty.  The Services Provider
will perform the Services (i) in accordance with all performance standards set
forth in Section 3, and (ii) with at least the same degree of care, skill and
diligence with which it currently performs or has in the past performed similar
services for or with respect to the Owner.


 


15.                               Dispute
Resolution.


 


(a)                                  Each
Party shall, from time to time, designate a senior officer (a “Dispute
Representative”) who shall have the authority to represent such Party and
resolve and settle any dispute arising under or in connection with this
Agreement or the Services performed hereunder. 
The Parties hereto agree to attempt to resolve all such disputes
equitably and in a good faith manner (unless, in the reasonable judgment of the
affected Party, the immediate pursuit of judicial equitable relief is necessary
to prevent or mitigate a risk of irreparable harm or damage).


 


(b)                                 If
any dispute arising under or in connection with this Agreement or the Services
performed hereunder is not resolved pursuant to Section 15(a) within thirty
(30) days from the date on which such dispute is submitted to the Dispute
Representatives, such dispute shall, if the Parties so agree, be submitted to
and resolved by binding arbitration, or in the absence of such agreement either
Party may pursue any and all remedies in respect of such dispute available to
such Party at law or in equity.  Any
arbitration proceeding arising under or in connection with this Agreement or
the Services performed hereunder shall be conducted pursuant to the terms of
the Federal Arbitration Act and (except as otherwise specified herein) the
Commercial Arbitration Rules of the American Arbitration Association in effect
at the time the arbitration is commenced. 
The venue for the arbitration shall be Midland, Texas.  The arbitration shall be conducted before a
panel of three (3) arbitrators, selected as follows:  (i) each Party shall specify one arbitrator within ten (10) days
of the end of the thirty (30) day period for dispute resolution under Section
15(a), and (ii) a neutral person shall be selected through the American Arbitration
Association’s arbitrator selection procedures to serve as the third
arbitrator.  The arbitrator designated
by any Party need not be neutral.  In
the event that any person fails or refuses timely to name his arbitrator within
the time specified herein , the American Arbitration Association shall
(immediately upon notice from the other Party) appoint an arbitrator for the
person or entity that has failed to appoint its arbitrator.  To the extent practical, the arbitrators
shall schedule the hearing to commence within sixty (60) days after the
arbitrators have been impaneled.  A
majority of the panel shall render an award or other decision within ten (10)
days of the completion of the hearing, which award or decision shall be final,
binding and conclusive upon the Parties hereto.


 


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Each Party shall have the
right to have an award or decision of such panel enforced by any court of
competent jurisdiction.


 


16.                               Excusable
Delay.  In no event shall the Services
Provider be deemed to be in default of any provision of this Agreement or
liable for delays or interruptions in the performance of Services to the extent
resulting from or arising out of or in connection with acts or events beyond
the reasonable control of the Services Provider; provided, however, that
the Services Provider shall exercise commercially reasonable efforts to
minimize the extent of any delays or interruptions in performance, and provided
further, that the excused delay or interruption shall last only as long as
the acts or events beyond the control of the Services Provider require.  Such acts or events include without
limitation acts of God, civil or military authority, civil disturbance, war,
strikes, fires, storms, other catastrophes, computer system failures, acts of
third parties, and other events of similar or dissimilar nature beyond the
Services Provider’s reasonable control.


 


17.                               Independent
Contractor.  The Parties hereto
acknowledge and agree that in the performance of their respective duties and
obligations hereunder they are acting as independent contractors of each other.


 


18.                               No
Assignment Absent Consent.


 


(a)                                  This
Agreement shall be binding on and inure to the benefit of each Party’s
respective successors and assigns; provided, however, that,
subject to Section 18(b) below, no Party may transfer, sell or assign,
whether by operation of law or otherwise, its rights or obligations under this
Agreement without the prior written consent of the other Party, which consent
may be withheld in the sole discretion of such Party.  Subject to Section 18(b) below, any attempt by a Party to
transfer, sell or assign, whether by operation of law or otherwise, its rights
or obligations under this Agreement without the prior written consent of the
other Parties shall be void and without force or effect.


 


(b)                                 Notwithstanding
anything to the contrary in this Agreement, the Owner shall be permitted to
assign any or all of their rights, title and interest hereunder to any of the
Owner’s Lenders: (i) as security in connection with obtaining or arranging
financing for the business activities of the Owner or (ii) in order to enforce
any security assignment described in clause (i) above.  The Services Provider shall, upon request,
furnish such consents to assignment, opinions, certifications and
representations and other documents as may be reasonably requested by the Owner
or Lenders in form and content reasonably acceptable to such Lenders.


 


19.                               Complete
Agreement.  This Agreement
constitutes the complete understanding between the Parties with respect to the
subject matter of this Agreement.


 


20.                               Amendment.  No modification or amendment of this
Agreement shall be binding upon any Party unless in writing and signed by the
Parties.


 


21.                               Governing
Law.  This Agreement has been made
and shall be governed, construed and enforced in accordance with the laws of
the State of Texas applied to contracts made and performed within the State of
Texas.


 


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22.                               Notice.  All notices and other communications
hereunder shall be in writing and shall be deemed duly given when personally
delivered or mailed (by registered or certified mail, return receipt requested,
postage prepaid) or faxed as follows:


 


(a)                                  If
to the Services Provider:


 


Cap Rock Energy
Corporation

500 West Wall, Suite 400

Midland, TX  79701

Phone: (432) 684-0311

Fax:  (432) 684-0333


 


Attn:  Ulen North, Executive Vice President


 


(b)                                 If
to the Owner:


 


NewCorp Resources
Electric Cooperative, Inc.

500 West Wall, Suite 400

Midland, TX  79701

Phone: (432) 684-0303

Fax:  (432) 684-0333


 


Attn:  David W. Pruitt, President


 


Any Party may change the
address to which such notice or communication shall be sent by giving written
notice to the other Parties of such modified address.


 


23.                               Severability.  In the event any portion of this Agreement
shall be found by a court of competent jurisdiction to be unenforceable, that
portion of this Agreement will be null and void, and the remainder of this
Agreement will be binding on the Parties as if the unenforceable provisions had
never been contained herein.


 


24.                               Time.  Time is of the essence with respect to each
of the provisions set forth in this Agreement.


 


25.                               Headings.  The headings used in this Agreement are for
convenience only and shall not affect the construction of any of the terms of
this Agreement.


 


26.                               Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute the same Agreement.  Any signature page of any such counterpart, or any electronic
facsimile thereof, may be attached or appended to any other counterpart to
complete a fully executed counterpart of this Agreement, and any telecopy or
other facsimile transmission of any signature shall be deemed an original and
shall bind such Party.


 


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27.                               Further
Assurances.  Upon the reasonable
request of the other Party, each Party hereto agrees to take any and all actions
necessary or appropriate to give effect to the terms set forth in this
Agreement.


 


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  NewCorp Resources
  Electric Cooperative, Inc.

  	
   

  	
  Substitute Sheet
  No. 13

  
	
  Service Agreement No. 2

  	
   

  	
   

  



 


IN WITNESS WHEREOF, each
of the Parties hereto has caused this Agreement to be duly executed on its
behalf as of the date first above written.


 


	
   

  	
  CAP ROCK ENERGY
  CORPORATION,

  
	
   

  	
  a Texas corporation

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ ULEN NORTH,
  JR.

  	
   

  
	
   

  	
   

  	
  Name:  ULEN
  NORTH, JR.

  
	
   

  	
   

  	
  Title:  Exec/VP

  
	
   

  
	
   

  
	
   

  	
  NEWCORP RESOURCES
  ELECTRIC

  COOPERATIVE, INC.,

  
	
   

  	
  an electric cooperative
  corporation

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ LEE D. ATKINS

  	
   

  
	
   

  	
  Name:  LEE D.
  ATKINS

  
	
   

  	
  Title:  Secretary/Treasurer

  
							



 


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EXHIBIT
A


 


SCOPE OF THE
SERVICES


 


The “Administrative
Services” shall mean the following specifically listed services and
activities to be rendered by the Services Provider on the behalf of the Owner.


 


1.                                       Accounting
Services.  Provision of (a)
budgeting, financial reporting and cash management services, (b) accounting and
auditing services, and (c) performance of such other accounting services as the
Owner may reasonably request.


 


2.                                       Tax
Services.  Provision of preparation
and filing of all necessary tax returns for the Owner in connection with an
independent public accounting firm.


 


3.                                       Management
Services.  Provision of services in
respect of the management of the assets of the Owner as the Owner may
reasonably request, including the administration of third party contracts
between the Owner and other parties.


 


4.                                       Information
Services.  Provision of information services to the Owner, including,
but not limited to, the sharing of information with the Owner acquired by the
Services Provider as a result of its membership with certain power or energy
related industry organizations.


 


5.                                       Consulting Services. 
Provision of consulting services on various aspects of ownership and
maintenance of the System, including tariff analysis, power cost recovery
factor review, ERCOT matters, preparation required for storms and outages, and
permitting and environmental consulting services.


 


6.                                       Legal Services. 
Provision of legal services, including, but not limited to, (a)
providing the Owner with legal counseling as to the Owner’s business
activities, and initiating, maintaining and defending any claims,
actions or proceedings to which the Owner is named as a party; (b) supervising
and monitoring Owner’s compliance with the terms and conditions of all
contracts under which Owner has any obligations or rights (except this
Agreement); and (c) advising or otherwise assisting the Owner with all
regulatory matters including, but not limited to, assisting the Owner in its
dealings with governmental, semi-governmental, administrative, fiscal or
judicial bodies, departments, commissions, authorities, agencies or other
entities having jurisdiction or regulatory power over the Owner’s business
activities.


 


7.                                       Insurance
Services.  Provision and maintenance
of all insurance required to be maintained by Owner pursuant to any agreement
providing financing for the assets of the Owner.


 


8.                                       Other
Overhead Services.  Provision of
such other administrative services, including utilities, office equipment and
supplies, postage, vending, recordkeeping, secretarial services and such other
services as the Owner may reasonably request.


 


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9.                                       Customer
Services.  Handling of all requests
for transmission service, for transmission ancillary services, for
interconnections, and for facilities studies and system impact studies, or
arranging for a qualified third party to provide such services in the manner
required by applicable laws and regulations.


 


10.                                 Additional
Administrative Services. 
Performance of such additional administrative services as the Owner
identifies from time to time as necessary for Owner to fully comply with all
legal requirements imposed on it as a transmission provider.


 


The “Variable Services”
shall mean the following specifically listed services and activities to be rendered
by the Services Provider on the behalf of the Owner and with respect to the
Owner’s substations, transmission lines and other transmission-related
facilities (the “Facilities”), and all other such support services as may be
reasonably requested by the Owner and as are needed for it to provide safe and
reliable transmission service in accordance with prudent utility practice and
all applicable legal requirements.


 


1.                                       Direction
of all operations of the Facilities and taking any action necessary to provide
reliable service to all of Owner’s customers.


 


2.                                       Installation
of system control and data acquisition equipment, communications equipment, and
related appurtenances as required to provide telemetry and remote control of
the Facilities.


 


3.                                       Performance
of inspections to determine the condition of the Facilities, to identify and
label the Facilities in accordance with the Owner’s property and accounting
codes, and to determine the need for the maintenance of or improvements to the
Facilities.


 


4.                                       Installation
and maintenance of metering equipment, relaying equipment, and related
appurtenances to the Facilities.


 


5.                                       Provision
of monthly and other inspections of the Facilities as needed, including meter
readings, recording counters, testing batters, and visually checking condition
of the substations and circuit breakers, air reservoirs and bushings per
manufacturer’s instruction books and service bulletins, as well as disassembly,
cleaning and lubrication of operating mechanisms, and painting if necessary.


 


6.                                       Provision
of all needed maintenance of the Facilities and grounds, including the
maintenance, replacement and testing of reclosers, and performing electrical
relay tests, operational checks, battery tests, and oil samples, annual weed
spraying, sand removal and mowing of weeds.


 


7.                                       Maintenance
and upgrading of the supervisory,
control and data acquisition system (“SCADA”) for the System,
including radio communications equipment.


 


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8.                                       Monitoring
of all substations and transmission lines 24 hours a day 7 days a week using a SCADA system, including
monitoring alarms such as breaker position, analog values including voltage and
current.  In the event the SCADA system
displays an alarm, the Services Provider will determine what action is needed
and contact appropriate persons to respond to the alarm and, if needed, open or
close reclosers or breakers to restore power or de-energize a line.


 


9.                                       Utilizing
data provided by the SCADA system and other information and develop a “work plan” each year to project needed
transmission, substation and distribution system improvements, including
analyzing historical loading data and projecting the load on the System.


 


10.                                 Coordination
of protective relays to limit the size of outages and to remove the fault on
the Facilities before equipment is damaged and review the device coordination
in the substations and distribution system and make changes necessary to
optimize the System protection.


 


11.                                 Installation
and removal of mobile substations to serve the load on a substation so
substation equipment can be de-energized and maintained without subjecting
customers to outages.


 


12.                                 Maintenance
of transmission rights of way.  The
maintenance to be done will be dependent on the condition of the right of way
and agreements with the landowner.  CRE
personal will determine the need for work on the right of way, select a
contractor to clear the right of way, and work with the landowner to accomplish
the work in a satisfactory manner.


 


13.                                 Performance
of annual inspections using an infrared camera to determine “hot” spots that
need maintenance.


 


14.                                 Determination
of needed repairs, replacements and upgrades to Facilities equipment, including
upgrading protective relays, changing out regulators to units with higher load
capability, replacing worn or broken insulators, repairing or replacing poles,
towers, foundations and guy wires, and coordination with outside contractors,
as necessary to perform needed upgrade work.


 


15.                                 Provision
of design and construction services with respect to substation and transmission
line facilities and, if applicable, managing outside subcontracts.


 


16.                                 Provision
of operation and maintenance services with respect to vehicles used in the
operation and maintenance of the Facilities.


 


17.                                 Performance
all repairs and replacements needed to restore services in the event of forced
outages and to repair storm and other damage to the Facilities.


 


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EXHIBIT
B


 


INITIAL ANNUAL
BUDGET


 


[To be attached]


 


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